Question
At the beginning of the year, Learer Companys manager estimated total direct labor cost to be $2,509,000. The manager also estimated the following overhead costs
At the beginning of the year, Learer Companys manager estimated total direct labor cost to be $2,509,000. The manager also estimated the following overhead costs for the year.
Indirect labor | $ 560,100 |
---|---|
Rent on factory building | 140,900 |
Factory utilities | 156,900 |
DepreciationFactory equipment | 480,900 |
Repairs expenseFactory equipment | 60,900 |
Indirect materials | 105,700 |
Total estimated overhead costs | $ 1,505,400 |
For the year, the company incurred $1,522,700 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $604,900; Job 202, $563,900; Job 203, $298,900; Job 204, $716,900; and Job 205, $314,900. In addition, Job 206 is in process at the end of the year and had been charged $17,900 for direct labor. No jobs were in process at the beginning of the year. The companys predetermined overhead rate is based on a percent of direct labor cost. Required 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the overhead applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end. 2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold at year-end.
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